I have spent 20 years working in nonprofit think tanks, the last 13 as a resident scholar with the Institute for Policy Innovation in Dallas. I also ran the Washington, D.C.-based Council for Affordable Health Insurance for nearly nine years. While I cover a range of political, economic and policy areas, I specialize in health policy. Prior to joining the think tanks, I taught philosophy. I received all three of my degrees—BBA in economics, masters in divinity and Ph.D. in humanities—from Texas universities. I was an ethicist for a medical school's panel reviewing human experimentation. I'm a member of the U.S. Commission on Civil Rights Texas Advisory Committee. For several years I was a political analyst for the USA Radio Network, and I hold a 6th degree black belt in Tae Kwon Do and still teach.

Seven Reasons States Should Just Say No To Medicaid Expansion

Democrats are desperately hoping the states will accept the Medicaid expansion being foisted on them by President Obama’s health care law, but they may be be disappointed.

The primary reason for their concern is blatantly self-serving: ObamaCare’s success, like its RomneyCare prequel in Massachusetts, will be judged solely by how many uninsured people get coverage. The pretense of increasing quality and lowering costs was abandoned months ago; now it’s all about reducing the uninsured.

If states refuse the Medicaid expansion, which the U.S. Supreme Court has ruled they can, the whole idea of universal coverage goes out the window. And ObamaCare will be judged a failure.

Currently, nine states have rejected the Medicaid expansion and six are leaning against it; 13 have said yes and four are leaning toward it. For states that are still undecided, here are several reasons they should reject the expansion.

1. Medicaid Is Bad Coverage — Medicaid is the worst health insurance coverage in the country, and yet ObamaCare did nothing to fix its many problems. Take access to physicians. The Texas Medical Association published a survey showing that the number of Texas doctors willing to accept new Medicaid patients has declined from 42 percent in 2010 to 31 percent in 2012, in large part because Medicaid pays doctors so little. For various reasons Medicaid beneficiaries often go to the emergency room instead of a family doctor. In addition, Medicaid drug formularies limit the poor’s access to many beneficial drugs.

The problem highlights a serious misunderstanding among Democrats pushing the legislation: Access to health insurance is not the same as access to health care. ObamaCare goes to great strides, and even greater expense, to ensure people have coverage. That does not mean they will be able to get care.

While Medicaid is better than having no insurance, expansion only exacerbates Medicaid’s many problems. Coverage for the poor should not be synonymous with poor coverage.

In addition, those designated as disabled are eligible for Medicaid, and that population has grown at unprecedented levels since Obama became president, from 7.5 million to 8.8 million.

Since Medicaid is a welfare program, ObamaCare becomes the biggest expansion of the welfare state since Lyndon Johnson’s War on Poverty. And considering the growing numbers, we apparently lost that “war.”

3. The Woodwork and Crowd-Out Effects — Those Medicaid growth projections are likely low, as eligible people “come out of the woodwork” to join the program. For example, an estimated 25 percent of the uninsured are eligible for Medicaid but not enrolled.

More importantly, employers with a large number of low-income workers who offered some type of basic coverage may drop it or shift some employees to part time, making them eligible under Medicaid’s new eligibility standards. That’s known as the “crowd-out effect.” Wal-Mart, the country’s largest employer, recently announced that it would take that step. And a small number of low-income workers buy their own coverage. They will likely drop it and shift to “free” Medicaid.

4. The Cost to State Budgets — Medicaid spending has been growing at about 8 percent a year, compared to economic growth of 1 percent to 2 percent. But ObamaCare puts Medicaid on growth hormones. Total Medicaid spending (state and federal) is projected to grow from about $400 billion to about $900 billion by 2020.

At 23.5 percent, Medicaid has become the biggest budget item for most state budgets, surpassing K-12 education. We are already at the point where other state priorities are suffering because of money being sucked up by Medicaid; and that problem will only get worse.

Expansion advocates claim that the federal government will absorb most of the cost of the newly eligible Medicaid enrollees—100 percent for a few years, dropping to 90 percent by 2020. That’s much larger than the average 57 percent share the federal government now pays. What a deal!

But those advocates sound like the spendthrift spouse after a shopping spree who boasts about all the money that was saved; what the fiscally responsible spouse wants to know is how much money was spent. Expanding Medicaid will still cost states billions of dollars, even at the reduced state share. And taxpayers are still paying for the coverage; the taxes—actually, borrowed money—are just coming from the feds rather than the state.

5. Federal Controls — While a bipartisan coalition of governors has asked Washington for more flexibility over their Medicaid program; ObamaCare doubles-down on federal control. If states thought federal mandates and restrictions were suffocating under traditional Medicaid, they will be gasping for air under the expanded portion.

6. Rampant Fraud — Medicaid fraud is rampant and will only get bigger under expansion. No one knows for sure how big the Medicaid fraud problem is, but estimates put it in the range of $60 billion a year.

For example, Texas spent $1.4 billion on Medicaid pediatric orthodontics—more than every other state combined! Some unscrupulous dentists have been making millions of dollars putting braces on low-income children’s teeth who did not need the work. But it wasn’t the state or federal government that identified the scam; it was the Dallas-based ABC affiliate.

States have been rapidly shifting their Medicaid populations to private sector managed care companies, which helps to reduce costs and fraud. But the government has yet to figure out how to cut the waste, fraud and abuse.

7. Loss of State Sovereignty — Medicaid is supposed to be a federal-state program. But the Medicaid expansion is one more effort by the federal government to micromanage the states and what they do. That effort is fundamentally breaking down our federalist system, a system in which the federal government has its sphere of authority, as do the sates—and individuals, for that matter.

Democrats claim that Republicans should work with them to implement the Medicaid expansion. But the time for “working together” was when the legislation was crafted, and Democrats rejected that option. Considering all the problems that will come with Medicaid expansion, states would be wise to reject it now.

Merrill Matthews is a resident scholar at the Institute for Policy Innovation in Dallas, Texas. Follow at http://twitter.com/MerrillMatthews

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All of these reasons ignore one simple fact: it is a Federal law — which I presume most Forbes readers would agree is a good thing — that hospitals are required to treat ANYONE regardless of ability to pay. If you think this is a bad thing, you can stop reading this piece now.

But if you agree with Ronald Reagan, who signed that law, that it’s a good thing, then the issue becomes who pays for that care. And at present, that’s the insured, who are charged higher premiums by insurance companies (who, after all, are in business to make money) to cover hospital charges which are inflated in order to cover the treatment of the uninsured. This in turn means that the cost is paid mainly by the middle and working classes, since the cost of health insurance for them is generally at the same cost (or close to it) as it is for CEOs.

What an expansion of Medicaid will do is to change this so that the cost is borne more by upper income brackets, since the funding will come from Federal coffers instead of workplace premiums (which may even drop — dare one hope? — as hospitals no longer have the excuse to keep them as high as they are to pay for people who are now insured.)

Regardless, the arguments presented here are completely specious when set against the reality that as long as we do not turn the ailing poor out into the streets, SOMEBODY is going to have to pay for their care. What the author is basically doing is to try to get you to ignore this, but in the end, it comes down to a wealth transfer issue, and all the other arguments are just sand thrown in your eyes.

Unfortunately, theslasher, while your comments make sense, those of us who deal with health policy know they are largely incorrect. The largest cost shifting affecting health insurance, as several studies have demonstrated, are from the underpayments of Medicare and Medicaid. Ironically, under the old rules, if a hospital took what’s known as a “disproportionate share” of the uninsured, it got federal money known as DSH payments to offset those costs, but those are going away under ObamaCare. If the hospital takes more Medicaid payments (really underpayments, since Medicaid pays about 60% or what private insurance would) as you propose, the hospital has to cost-shift more to private insurance to make it up. Health insurance and all the cross subsidies are very complicated. So while you may think my arguments are “completely specious,” if you knew more about how the system works you might have a different opinion.

Ronald Kirby Thanks for using Pic of my sign at the Supreme Court. This sign was old, I carried it on Capitol Hill prior to passage of Obamacare. Many Congressman would stop and say thanks for being out there. I carried a no. of signs at various time but this sign hit the mark. The red is from when it was posted outside my house and we got a little rain. I’m 5-10 min to the Hill. So many came to battle Obamacare. I carried a sign on the Hill, “Thank You Massachusetts, Welcome Senator Brown”. This Pic made WSJ Picture of the week. We thought Obamacare was done when Sen. Brown was elected. Finally Justice Roberts turned his back on us and the Constitution to pass it. Please continue the fight in the States are where ever you can.

Thanks for this article. I have to agree, when you take away the citizens agency to choose then you have a real problem on your hand. I’m sure dentists and orthodontists aren’t happy about this either.